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Tyranny of the Invisible Hand
Sat May 1, 2004 19:59
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Tyranny of the Invisible Hand
A Critique of the Capitalist System



"This troubled planet is a place of the most violent contrasts. Those
that receive the rewards are totally separate from those who shoulder
the burdens. It is not a wise leadership." - Mr. Spock (of Star Trek),
"The Cloud Miners"


I. Capitalism is Exploitative


Capitalism (also called "the wage system," "the boss system" or "the
profit system") is exploitative and authoritarian. It cannot be
reformed and should be abolished in favor of a classless society based
on self-management. Capitalism is an economic system based on
wage-labor and profit. Wage-labor is the defining characteristic of
capitalism. Markets, while they usually accompany capitalism, are not
the defining characteristic of capitalism - wage-labor is. Markets
existed long before capitalism and in many other economic systems
besides capitalism, and one unusual form of capitalism - state monopoly
capitalism - largely does away with markets. Under capitalism the
majority of the population must sell their labor (usually via working at
a job) in order to survive.
There are two main classes in all capitalist systems: the capitalist
class (or bourgeoisie) and the working class (or proletariat). Under
some circumstances capitalism can have other classes as well, but all
forms of capitalism have at least these two classes. The capitalist
class owns the means of production (or the vast majority of them),
either directly or through organizations they control (such as
corporations), and the working class does not. Means of production are
non-human objects that are used to produce things, such as factories,
mines, land, etc. Since workers do not have access to the means of
production they must sell their labor to those who own the means of
production - the capitalist class. Members of the capitalist class, by
definition, are wealthy enough that they do not have to sell their labor
to survive (1). They may choose to do so for whatever reason but are
not threatened with the possibility of becoming poor if they do not.
This is the basic structure of a capitalist system. The Hiltons,
Rockefellers, Waltons, Kennedys, Mellons, Murdoch, Fords, Bushes, and
Carnegies (ie. the super-rich) are all typical members of the capitalist
class.

Workers are always paid less then the value of the goods they produce -
this is where profit comes from. If workers were paid an amount equal
to what they produced there would be no money left over for the
capitalist's profit. The workers are the ones who actually produce
things, the capitalists contribute no productive labor. The capitalist
thus makes money without having to do any productive labor. As that
money is then used to purchase things that were produced by workers'
labor, the capitalist is living off the labor of the workers. Hence,
Capitalism is inherently exploitative. The fruits of this exploitation
are distributed to members of the capitalist class not only in the form
of profit but also through dividends, interest, rent and other means.

Capitalists try to pretend this is "voluntary" or "natural" but it is no
more voluntary or natural then paying taxes. In order for a worker to
survive s/he must sell his/her labor and become a wage-slave. Otherwise
s/he will not be paid and will eventually starve to death. While some
form of productive labor is necessary to produce the basic necessities
needed to survive (food, shelter, etc.) there is no reason why this must
be in the form of wage-labor. For most of human history it has not.

Historically pre-capitalist societies that developed into capitalist
ones have all gone through a process called proletarianization whereby
the majority of the population was changed from their previous status
(usually of peasants) into workers (proletarians). This involved
expropriating the land and forcing the population off it (2); thereby
putting the population in a situation where they have to sell their
labor to make a living (3). If most live on the land (as they did in
many pre-capitalist societies) then they will not have to sell their
labor to make a living and full-fledged capitalism is impossible.

The process of proletarianization happened differently in different
places and had a number of variations with more then a few bumps on the
road. In the first societies where proletarianization started it was a
long process that was not originally initiated with the desire to create
a capitalist society but by other historical forces. One of the first
capitalist countries, England, began this with the "enclosures" whereby
lords would enclose land that formerly belonged to peasants and
expropriate it for themselves (4). In Mexico the majority of
proletarianization started under President Benito Juarez and rapidly
accelerated under the dictator Porfialo Diaz. Both Juarez and Diaz were
classical liberals who believed in free market capitalism and private
property. To that end, Juarez initiated a program whereby public lands
and common lands held by Native Americans was expropriated and sold to
the highest bidder. Since they have more money, the majority of this
land got concentrated in the hands of rich capitalists. Small
landholders were often expropriated as well (5). In most of North
America the indigenous economic systems were eventually destroyed by
force, along with the indigenous people, and replaced with a capitalist
system (6). In some societies war played a significant role in
uprooting peasants and transforming them into wage workers.

Capitalists sometimes defend the exploitation inherent in capitalism by
claiming that the capitalist contributes to production by providing
money and the means of production, which he owns, to the production
process. This is a subtle form of circular logic, since it assumes
capitalist property rights in order to defend capitalism. 'Providing the
means of production' simply means 'allowing it to be used.' Granting
permission itself is not a productive activity, it does not produce
anything. If producers cease to produce, production will stop in any
society, regardless of the economic system. But if owners stop granting
permission, production is impacted only if their authority over the
means of production is obeyed. Their authority derives from the violent
and coercive mechanisms of the state, which ensures that capitalists
have this ability to allow or deny access to the means of production by
workers. Not only is "providing the means of production" not a
productive activity, it depends on a system of organized, systemic
coercion to maintain the capitalist's monopoly (or near-monopoly) of the
means of production. Capitalist exploitation of workers derives from
the power capitalists have over the means of production, it's
monopolization in their hands. That power is used by them to gain
extreme wealth at the workers' expense. It was originally created
through conquest & coercion and is maintained through state violence,
typically in the form of government enforcement of property rights.

Other workers, not capitalists, produced the means of production. The
capitalist obtains them with the money from previous profits. Those
profits in turn came from previous profits and so on back to the origins
of capitalism. Those original accumulations of money used to start this
whole process of capitalist accumulation came from fortunes made as a
result of conquest & direct expropriation (such as colonialism) as well
as fortunes achieved under pre-capitalist class societies such as
feudalism or slavery. Thus from a historical perspective capitalism
cannot be considered just.

A similar attempt to justify the exploitative nature of capitalism is
the claim that profit is the reward for taking risks. It is true that
investing usually entails taking risks (one could lose the investment),
but just because someone is taking a risk does not mean that s/he is
producing anything. Most human activity involves risks of some sort.
If a criminal robs someone at gunpoint s/he is taking a risk as well.
S/he could go to jail, the robbery could go wrong, s/he could get hurt,
etc. That does not change the fact that it is robbery. The same is true
of the risks taken by capitalists. The workers take as much of a risk,
if not more, as the capitalist. If the business fails the worker is
unemployed. The worker is then usually in a worse situation then the
capitalist because the capitalist is wealthy and can weather such a
situation much easier then those on lower levels of the hierarchy. In
addition, many jobs entail risks to workers' life or limb, whereas
investment does not.

Capitalists like to claim that their wealth is the result of them
working hard by running their business, managing portfolios, etc. A
mafia boss also does lots of work to plan his robberies and keep his
illicit enterprise going but his actions are still theft. Many
capitalists don't even run a company, they derive their income solely
from stocks, bonds, interest, dividends, rent, etc. This attempt to
justify capitalist exploitation completely fails in these cases because
they aren't even running a company or doing any work at all.
Manipulating portfolios doesn't produce anything useful; sticking money
in the bank and letting it accumulate interest isn't hard work.

Some capitalists do choose to manage companies. Since they run the
business, they not surprisingly choose to pay themselves huge salaries
(along with other perks) that are derived mostly from the surplus value
exploited from the workers. While some forms of production do require
coordination, this does not justify capitalist forms of production or
the grossly disproportionate amount of wealth capitalists are given. In
a slave society slave drivers and owners would sometimes do coordination
necessary for production while making their slaves produce for them.
Just as it is possible to coordinate production without slave drivers it
is also possible to coordinate production without capitalists.
Coordination can be assigned to a worker (or committee of workers),
elected, recallable and mandated at worker assemblies and paid a normal
wage, just like any other task. There have been many examples of
worker-run cooperatives, run on a non-hierarchical basis without
capitalists, producing things just as effectively as a capitalist
corporation. There is no reason why individuals involved in
coordination tasks should be given greater wealth or power than those
doing other tasks, let alone given the dictatorial power bosses &
capitalists have over the workplace.

Like slave owners, capitalists may spend a large portion of their time
manipulating their underlings to maximize the amount of money they make,
but that time neither produces anything nor justifies the privileged
position of the capitalist. Most of the "work" done by capitalists
running a business is in reality manipulating workers so as to maximize
exploitation (thereby maximizing profit). Most capitalists hire people
to do whatever coordination and administration is necessary for
production and do little of it themselves. In contemporary capitalism
this has lead to the growth of a separate techno-managerial class that
controls the workers for the capitalists. In general the higher up the
hierarchy and the farther from the point of production the less genuine
coordination is done. A thief that does a lot of scheming is still a
thief.

In the United States the richest 1% of the population (the capitalist
class) owns more wealth then the bottom 95% of the population combined
(7). It is physically impossible for that one percent to work harder
then the other ninety-five percent. There simply aren't enough hours in
the day. The average American worker works around 50 hours a week; for
the capitalists to work ninety-five times more then the average worker
he would have to work 4,250 hours a week! There are only 168 hours in a
week; it's not possible for this wealth disparity to be the result of
capitalists working harder.



II. The Authoritarian Structure of Capitalism


Capitalism is inherently authoritarian and anti-liberty. The structure
of a company (or state enterprise) is essentially totalitarian in
nature. There is a hierarchical power structure, with those at the top
exerting almost complete control over those under them. Those on the
bottom must obey those on the top. While there may be some amount of
consultation from the top to the lower levels, the same can be said of
any slave society. There are no elections, no voting. Those on top
have absolute rule. Capitalism, like all class societies, is an economic
dictatorship.

True, theoretically a worker can leave a job, but s/he must still sell
his/her labor to a capitalist if s/he wants to survive. Workers can
only change jobs if the economic conditions are good enough that they
can find a different job. However, that different job has the same
basic authoritarianism as the old one and so it isn't really an escape
from this. Under good circumstances you can switch bosses but most
people can't choose not to have a boss. This is not the result of some
law of nature but of the fact that the capitalist class has a (state
protected) monopoly over the means of production. The fact that one can
quit a job does not make capitalism just - if you could immigrate from a
society ruled by a totalitarian state that still wouldn't make
totalitarianism right. The same is true of economic totalitarianism. A
slave that can choose his/her master is still a slave.

Defenders of the capitalist system like to distract from this
authoritarian structure by babbling on about how theoretically it is
possible under capitalism for a person to go from the bottom of the
hierarchy to the top, joining the capitalist class. While most forms of
capitalism do have some degree of social mobility, apologists for
capitalism tend to overstate it. Only a tiny number of workers ever
manage to join the capitalist class. The few examples of workers who do
manage to join the capitalist class are usually from the better off
sections of the working class and often receive help from the state or
other members of the capitalist class. A person born to wealthy parents
will be much more likely to be wealthy as an adult than a person born to
poor parents; the odds are stacked. Even going from worker to petty
bourgeoisie (small business owner) is difficult to do. For the few who
even have the opportunity to set one up, most small businesses go under
within ten years and the majority do not become large businesses or
catapult their owners into the capitalist class. Often they just become
slaves to the bank. While there are occasionally exceptions, overall
the immense majority of people have little choice but to sell their
labor in order to survive. If all workers were able to rise out of the
working class easily the system would collapse. In order to have a
hierarchical system you have to have some on the top and others on the
bottom.

Even if the amount of social mobility in capitalism were as great as
supporters of capitalism claim, it would not matter. If it is possible
for someone to move from the lowest position of an authoritarian system
to the highest position, it is still unethical because it is an
authoritarian system. If it were possible to go from homeless person to
dictator within a fascist system, fascism would still be wrong. In many
Leninist states there were individuals who went from being a worker to
being part of the ruling class, in some cases even joining the
Politburo, yet that does not make Marxist totalitarianism an acceptable
system. In Colonial Brazil, there were slaves who managed to become
free and even become slave owners themselves. It was as rare as workers
becoming capitalists in contemporary capitalism, but it did happen and
was theoretically